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EHedger Afternoon Grain Commentary 6/15/2012
Jun 15, 2012
It was a sharply lower day in the grains especially in the old crop contracts. July corn closed 22 cents lower at $5.79 ½ while December corn was down 10 cents at $5.06. July soybeans closed 10 cents lower at $13.76 while November ended the session 5 ¼ cents higher. July wheat was down 14 cents at $6.09 ½.
We began the day with a USDA announcement of cancelled soybean sales to China (147,000 MTs) for old crop. At the same time they announced 120,000 MTs of old crop bean sales to "unknown" and another 262,000 MTs of new crop sales to China.
At 10:30 Informa released their acreage estimates. To the market’s surprise they ended up increasing both corn and soybean acres. They are now estimating corn acres at 96.759 million (approx 700,000 acre increase). They are estimating bean acres at 75.959 million (approx 2 million acre increase). They also increased spring wheat acres to 13.5 from 12.0 and lowered cotton acres by approx 200,000.
An overall increase in acres would be obviously be considered bearish. The main thing to remember is the market will be focusing on the upcoming USDA acreage number (July 29th) as well as the forecast. Today’s midday showed an increase in precipitation next week and was overall considered "bearish". We will have to see if this is the same forecast we get on Sunday night.
The other thing to watch for on Sunday is outside market influence from the Greek elections. This has been a large concern for the market and much of this may already be worked into the current price levels. Still, if you see a sharp drop in the Dow Jones and rally in the US$, watch out for weaker grains.
Next week we will have the quarterly stocks and acreage reports on Friday the 29th. This is one of the most important report days of the year for market direction. To add to the excitement we will also have the markets open during the release of this report for the first time. As a hedger you will want to be positioned for coverage prior to Friday.
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